Dowling College in bankruptcy with support deal, property sale plans

By Caroline Salls

Pittsburgh, Nov. 30 – Dowling College filed Chapter 11 bankruptcy on Nov. 29 in the U.S. Bankruptcy Court for the Eastern District of New York to seek a sale of its real property.

The college requested court approval of the bid procedures for the proposed sale of its Oakdale, N.Y., campus. Dowling said no stalking horse bidder had been identified as of Tuesday. However, it said it reserved the right to enter into a stalking horse purchase agreement in the future.

If a stalking horse bidder is selected, Dowling said it would pay it a breakup fee and expense reimbursement of up to 2% of the purchase price if it ultimately is not the winning bidder.

Bids are due by 4 p.m. ET on March 27.

An auction will be held no later than March 31, if necessary. Bids at auction must be made in minimum increments of $100,000.

In addition, Dowling requested court approval to sell residential property through several sales.

Plan agreement

The college also entered into a plan support agreement with series 2006 bond insurer ACA1 and the holders of its series 1996 bonds, series 2002 bonds and series 2015 bonds.

In accordance with the plan support agreement, a liquidation plan and disclosure statement will be filed no later than Jan. 16.

Dowling said it will work with the consenting creditors to prepare a plan, a disclosure statement and related documents.

Under the plan, administrative claim, U.S. Trustee fees and debtor-in-possession facility claims will be paid in full in cash.

Consenting creditors will receive their respective cash collateral, the cash proceeds from the sale, use or other disposition of their respective collateral and a deficiency claim for any balance.

Other secured claims will be paid with the proceeds from the sale of collateral.

Holders of general unsecured claims will receive proceeds from the sale of any of the college’s unencumbered assets and any remaining collateral proceeds after payment in full of priority unsecured claims and satisfaction in full of secured creditor claims.

The support agreement requires the plan to be confirmed by April 24 and to take effect by May 8.

Dowling said chief restructuring officer Robert S. Rosenfeld of RSR Consulting, LLC took over as the day-to-day manager of the college and is responsible for managing it as debtor-in-possession in this Chapter 11 case and assisting in the formulation, preparation and consummation of the plan.

DIP financing

In conjunction with the bankruptcy filing, the college obtained a commitment for $4.97 million in debtor-in-possession financing.

UMB Bank, NA is the DIP financing agent.

The facility will mature on May 8, 2017.

Interest will accrue at a rate of 9% and be capitalized and paid in-kind.

A total of $1.3 million of the financing will be available on an interim basis.

According to court documents, Dowling has $100 million to $500 million in assets and $50 million to $100 million in debt.

The college is represented by Klestadt Winters Jureller Southard & Stevens, LLP.

Dowling is based in Oakdale, N.Y. Its Chapter 11 case number is 16-75545.

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